AMD court papers allege special Intel deals with PC makers

Advanced Micro Devices filed more legal papers this week alleging monopolistic practices by Intel. Some of AMD's allegations involving PC makers are the most intriguing. Even when large blocks of text have been redacted. Moreover, the stridency of the language approaches that of the attacks from Nvidia's CEO in previous weeks.

AMD

AMD in June 2005 filed an antitrust complaint against Intel claiming that Intel illegally maintained a monopoly in the market for microprocessors.

As part of the ongoing legal process, AMD
filed a response
(to Intel's Preliminary Pretrial Statement) on Thursday with the U.S. district court in Delaware concerning Intel's alleged monopolistic practices.

The document contains broad allegations as well was vendor-specific ones. Most of the particulars of allegations regarding "exclusive dealing" agreements are redacted (blackened out), but tantalizing prefaces to the redacted areas remain.

Allegations related to Sony and Toshiba are significant because Sony is still an exclusive user of Intel chips in its mainstream notebooks (as is Apple), while Toshiba broke a long stretch of exclusivity last year.

"Sony and Toshiba were 100% Intel exclusive for five and seven years respectively." After some redacted text, the allegations continue: "(although Sony's five year clock continues to tick as it remains exclusive today). Intel denies that this long term exclusivity had anything to do with the millions of dollars that Intel funneled into each company."

There are also allegations related to IBM. "Intel denies that it ever 'paid IBM' to limit IBM's marketing of Opteron-based systems or to 'shelve' development of Opteron servers."

After a swath of redacted text, the allegation continues. "So, between 2000 and 2005...Intel conditioned its grant of discounts, rebates, special funds and other consideration on IBM's explicit agreement to maintain its Intel exclusivity and to cancel or defer launches of AMD-based products."

Intel's statement that predates the AMD filing claimed that "AMD's lawsuit is part of a larger strategy to secure greater success by deterring Intel from aggressive competition. Stripped of hyperbole, AMD's complaint accuses Intel of competing too aggressively, by offering customers attractive, discounted prices and marketing and technical support to win their business."

Intel also stated that "AMD's case appears based on the logical fallacy that despite AMD's strong success in the market segments in which its products offered advantages, it should have been even more successful, and thus Intel must have competed unfairly."

Intel continued. "AMD...has often floundered, introducing products that often failed to live up to expectations, even after embarrassing delays. And while AMD seeks to portray itself as the innovator in the microprocessor industry, its brief period of a computing performance advantage with the Opteron microprocessor cannot mask AMD's historical and current position as a laggard in computing performance."

And in an Intel response filed on Thursday, the company said: "Inconvenient facts--such as AMD's 'capture [of] nearly 60% of HP's U.S. retail sales,' according to AMD's own complaint...are swept aside to preserve the dramatic effect."

"Moreover, the argument that Intel's discounts are provided on an 'all or nothing' basis, or that OEMs are subject to punishment or retaliation, is wrong. All of the major OEMs doing business with Intel received significant discounts, whether or not they bought from AMD, and AMD does not contend otherwise."

In AMD's response filed this week the company says: "There is a fundamental distinction between exclusion of a rival through straight-forward underselling (price predation) and exclusion by means of a conditional discount that, on a unit-by-unit basis, is nominally less than the rival's discount."

AMD also makes some more sweeping allegations, including: "What this case is...about is Intel's conditional payments, conditional discounts, punishments, threats, coercion, and assorted technological chicanery that in combination closed AMD's heightened window of opportunity and thereby prevented it from achieving sustainability as a long term innovation rival. Intel is in denial when it says nothing of the sort happened. The record even at this early and preliminary stage of discovery is replete with instances of just such misconduct."